supplychainmanagement - maciejczak
TRANSCRIPT
On being a supply network manager
Strategy
Concepts
Supply Network Behaviour
Vertical Integration
NetworkdynamicsQuantitativeQualitative
Network ManagementCoordinateDifferentiateReconfigure
Supply Network Relationships
Partnerships Markettrading
What are Supply Networks?
• supply networks vs. supply chains• buyer-supplier relationship• a supply network is a system of
organisations connected by server-client links - upstream/downstream - that service processes & activities (operations) bringing added value to each client and ultimately the end customer.
Flows of products, services & information
second-tiersuppliers
first-tiersuppliers
first-tiercustomers
second-tiercustomers
For Company AInternal supply networkImmediate supply networkTotal supply network
Company B
Company C
X
X
X
XX
Supply side Demand side
Up
stre
am
Dow
n st
ream
Issues
Quality
SpeedReliabiity
Flexibility
Cost
Perf
orm
ance
obj
ectiv
esResource Usage
§make or buy (contract out
§market-based purchasing?
§supply partnerships?
Process
technology
Supply networkrelationships
Capacity Mar
ket c
ompe
titiv
enes
s
Decisions
Inventory
Process stage
Demand Type
Number & Value Other
Raw Material WIP Finished Goods Independent
Dependent
A Items B Items C Items
Maintenance Dependent Operating
Inventory Classifications
Item Materials WithIndependent Demand
Materials WithDependent Demand
DemandSource Company Customers Parent Items
MaterialType Finished Goods WIP & Raw Materials
Method ofEstimatingDemand
Forecast & BookedCustomer Orders
Calculated
PlanningMethod EOQ & ROP MRP
Dependent versus Independent Demand
Inputs to theProduction Plan
Aggregate Production Plan
MarketingCustomerDemand
EngineeringDesign
Completion
ManagementReturn onInvestment
Capital
HumanResourcesManpowerPlanning
ProcurementSupplier
Performance
FinanceCash Flow
ProductionCapacityInventory
Requirements for Effective Use of Dependent Demand Inventory Models
Effective use of dependent demand inventory models requires that the operations manager know the:
– master production schedule– specifications or bills-of-material– inventory availability– purchase orders outstanding– lead times
The Planning Process
Production Plan
Execute MaterialPlans
Master ProductionSchedule
MaterialRequirements
Plan
CapacityRequirements
Plan
Execute CapacityPlans
Realistic??NoYes
Typical Focus of the Master Production Schedule
Make to Order
(Process Focus)
Assemble to Order or Forecast
(Repetitive)
Stock to Forecast(Product Focus)
Schedule finished product
Steel, Beer, Bread Light bulbs, Paper
Print shopMachine shop
Fine dining restaurantExamples:
Number of end items
Number of inputs
Typical focus of the master production
schedule Schedule orders
Schedule modules
Motorcycles, autos, TVs, fast-food
restaurant
• List of components & quantities needed to make product
• Provides product structure (tree)– Parents: Items above given level– Children: Items below given level
• Shows low-level coding– Lowest level in structure item occurs– Top level is 0; next level is 1 etc.
Bill-of-Material
• Modular bills– Modules are final components used to make
assemble-to-stock end items
• Planning bills– Used to assign artificial parent– Reduces number of items scheduled
• Phantom bills– Used for subassemblies that exist temporarily
Special Bills-of-Material
Bicycle(1)P/N 1000
Handle Bars (1)P/N 1001
Frame Assembly (1)P/N 1002
Wheels (2)P/N 1003
Frame (1)P/N 1004
Bill-of-MaterialProduct Structure Tree
Time-Phased Product Structure
1 2 3 4 5 6 7 8
D
G2 weeks
1 weekF
E
3 weeks
2 weeksA
1 week
C1 week
B
2 weeks to produce
E
D
Must have D and E completed here so production can begin
on B
2 weeks
1 week
Start production of D
• Materials requirements planning, referred to by the initials MRP, is a technique which assists a company in the detailed planning of its production. Recall here that the master production schedule sets out an aggregate plan for production. MRP translates that aggregate plan into an extremely detailed plan.
Material Requirements Planning (MRP)
• Increased customer satisfaction due to meeting delivery schedules
• Faster response to market changes• Improved labor & equipment utilization• Better inventory planning & scheduling• Reduced inventory levels without reduced
customer service
MRP Benefits
Structure of the MRP System
MRP by period report
MRP by date report
Planned orders report
Purchase requirements
Exception reports
MRPPrograms
Master ProductionScheduleBOM
Lead Times(Item Master File)
(Bill-of-Material)
Inventory Data
Purchasing data
Forecast &Firm Orders
MaterialRequirements
Planning
AggregateProductionPlanning
ResourceAvailability
MasterProductionScheduling
ShopFloor
Schedules
CapacityRequirements
PlanningRealistic?
No, modify CRP, MRP, or MPSNo, modify CRP, MRP, or MPS
YesYes
MRP and The Production Planning Process
MRP Systems - Input and Output
MasterProductionScheduleBill of
MaterialsMaterial
RequirementsPlanning System
InventoryStatus
Planned Order& OtherReports
Item Master PurchasingData
• Shows items to be produced– End item, customer order, module
• Derived from aggregate plan
Master Production Schedule
• Shows items to be produced– End item, customer order, module
• Derived from aggregate plan
Master Production Schedule
Item/Week Oct 3 Oct 10 Oct 17 Oct 24
Drills 300 200 310 300
Saws 300 450 310 330
Example
Derivation of Master Schedule
Therefore, these are the gross requirements
for B10 40+10= 50 40 50 20 15+30
= 45
1 2 3 4 5 6 7 8PeriodsGross requirements: B
Periods10 101 2 3
Master schedule for S sold directly
40 50 15
A
CB
5 6 7 8 9 10 11
Lead time = 4 for AMaster schedule for A
40 20 30
S
B C
8 9 10 1211 13
Lead time = 6 for SMaster schedule for S
MRP Dynamics
• Supports “replanning”– Problem with system “nervousness”
• “Time fence” - allows a segment of the master schedule to be designated as “not to be rescheduled”
• “Pegging” - tracing upward in the bill-of-materials from the component to the parent item
• That a manager can react to changes, doesn’t mean he/she should
MRP and JIT
• MRP - a planning and scheduling technique with fixed lead times
• JIT - a way to move material expeditiously
• Integrating the two:– Small bucket approach and back flushing– Balanced flow approach
Lot-Sizing Techniques
• Lot-for-lot• Economic Order Quantity• Part Period Balancing• Wagner-Whitin Algorithm
Extensions of MRP
• Closed loop MRP• Capacity planning - load reports• MRP II - Material Resource Planning• Enterprise Resource Planning
Extensions of MRPCapacity Planning
• Tactics for smoothing the load and minimizing the impact of changed lead time include:– Overlapping - reduces the lead time, entails
sending pieces to the second operation before the entire lot has completed the first operation
– Operations splitting - sends the lot to two different machines for the same operation
– Lot splitting - breaking up the order and running part of it ahead of the schedule
MRP in Services
• Can be used when demand for service or service items is directly related to or derived from demand for other services– restaurant - rolls required for each meal– hospitals - implements for surgery– etc.
Distribution Resource Planning
• DRP requires:– Gross requirements, which are the same as
expected demand or sales forecasts– Minimum levels of inventory to meet customer
service levels– Accurate lead times– Definition of the distribution structure
B(4)
E(1)D(2)
C(2)
F(2)D(3)
A
Product Structure Tree for Assembly Afrom bill of materials
Lead TimesA 1 weekB 2 wksC 1 wkD 3 wksE 4 wksF 1 wk
Demandwk 10 50 Awk 8 20 B (Spares)wk 6 15 D (Spares)
No. of components for each product + when needed.
Product Structure Tree
LT = 1 week
Week: 1 2 3 4 5 6 7 8 9 10A Required 50
Order Placement 50
Requirements Planning
1. Schedule no. of units of “A” backwards to allow for lead time. 2. place order for 50 of “A” at week 8 to receive in week 10
Lot sizing§ Lot-for-lot (L4L)§ Economic order quantity (EOQ)§ Least total cost (LTC)§ Least unit cost (LUC)
Week: 1 2 3 4 5 6 7 8 9 10A Required 50
Order Placement 50B Required 20 200
Order Placement 20 200
surplus LT = 2
B(4)
E(1)D(2)
C(2)
F(2)D(3)
A
MRP
schedule components of “A”. 4 B’s in each A (50x4) = 200Bs. back the schedule up for 2 weeks lead time.
MRPWeek: 1 2 3 4 5 6 7 8 9 10
A Required 50LT=1 Order Placement 50
B Required 20 200LT=2 Order Placement 20 200
C Required 100LT=1 Order Placement 100
D Required 55 400 300LT=3 Order Placement 55 400 300
E Required 20 200LT=4 Order Placement 20 200
F Required 200LT=1 Order Placement 200
B(4)
E(1)D(2)
C(2)
F(2)D(3)
A Part D: Wk 640 + 15 spares
45
Repeat for all components ==> final MRP
• Frozen– No schedule changes allowed
within the time frame• Moderately Firm
– Specific changes allowed within product groups as long as parts are available.
• Flexible– Significant variation allowed as
long as overall capacity requirements remain at the same
Time Fencing
MRP Reports & Information
• Primary– Planned orders - to release at
a future time.– Order release notices -
execute planned orders– Changes in due dates of
open orders due to rescheduling
– Cancellations or suspensions of open orders due to cancellation or suspension in the MPS.
– Stock status data
§ Gross Requirements§ On-hand§ Net requirements§ Planned order receipt§ Planned order release
§ Gross Requirements§ On-hand§ Net requirements§ Planned order receipt§ Planned order release
MRP Example
A(2) B(1)
D(5)C(2)
X
C(3)
Item On-Hand Lead Time (Weeks)X 50 2A 75 3B 25 1C 10 2D 20 2
Requirements include 95 units (80 firm orders and 15 forecast) of X in wk 10 plus the following spares:
Spares 1 2 3 4 5 6 7 8 9 10A 12B 7C 10D 15
C Gross Requirements 45 36 64LT=2 On-Hand=10 10
Net Requirements 35 36 64Planned Order Receipt 35 36 64Planner Order Release 35 36 64
D Gross Requirements 15 135LT=2 On-Hand=20 15 5
Net Requirements 130Planned Order Receipt 130Planner Order Release 130
A(2) B(1)
D(5)C(2)
X
C(3)
MRP Example
Day: 1 2 3 4 5 6 7 8 9 10X Gross Requirements 95
LT=2 On-Hand=50 50Net Requirements 45Planned Order Receipt 45Planner Order Release 45
A Gross Requirements 90 12LT=3 On-Hand=75 75
Net Requirements 15 12Planned Order Receipt 15 12Planner Order Release 15 12
B Gross Requirements 7 45LT=1 On-Hand=25 7 18
Net Requirements 27Planned Order Receipt 27Planner Order Release 27
C Gross Requirements 45 36 54 10LT=2 On-Hand=10 10
Net Requirements 35 36 54 10Planned Order Receipt 35 36 54 10Planner Order Release 35 36 54 10
D Gross Requirements 15 135LT=2 On-Hand=20 15 5
Net Requirements 130Planned Order Receipt 130Planner Order Release 130